Aggregation Methods in Supply Chain

In supply chain, there are broadly three types of demand aggregation:

Temporal Aggregation: Suppose you are a hyper local grocery retailer, say Big Basket. If the demand from certain area is not enough for you to deliver it every day, then you will aggregate the demand across multiple days and say that you will deliver in this area only every two days.

Spatial Aggregation: For the same hyper local retailer, say Big Basket, a spatial aggregation is about aggregating demand from two to three areas and serving it together instead of serving these areas separately. This is because there is not enough demand in each area individually.

Product Aggregation: Aggregating multiple products in a single order is a popular phenomena to reduce transaction costs. Order aggregation is a cost-effective way to deliver to simple low value products to multiple people.

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